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What Is Dropshipping & How Do You Get Started?
Understanding dropshipping and steps to launch your own online business
May 2, 2024
16 min read
Ever wondered why dropshippers fail? You are not alone. Over the years, I also made mistakes and I learned the hard way.
Do not let this happen to you. Today, you will learn two things: common dropshipping mistakes and the proper approach to dropshipping.
That and a whole lot more! If you are ready, let us dive in!
Most dropshippers pick a niche they love or a niche they think they know. However, this choice does not always produce the best results. You must indeed pick a niche that you are passionate about. But then you must also consider if this niche has a market.
“There is a market for everything!” you say. That is correct, but is the size of the market big enough to be profitable? In essence, you must pick a niche that has:
You can dropship bonsai tools if you want, but you must ask yourself: for every 100 people you know, how many of them are into growing bonsai? On the other hand, how many of these 100 people wear a shirt?
Many dropshippers do not investigate the product characteristics and end up not making a sale. It is so easy to import products to a dropshipping store—it entails no cost.
This ease of the process makes dropshippers unconscientious. They just import products for the following reasons:
While these are excellent product characteristics, you need to do better than that. Pick a winning product, is what you must do. A winning product, first and foremost, has sales.
Use a tool that can show you if a product has sales. An example of this tool is Tradelle, a supplier, product research and importation tool.
As you can see from the screenshot, Tradelle provides you with valuable data if a product is a winner. The one above surely is: just look at the chart of its sales performance. In addition, you can even see how many stores you will compete against, and which countries show the highest interest in the product.
There is nothing wrong with selling multiple products, especially if you want to give your customers options. However, this can become your bane instead of your boon.
There is a reason fast-food chains do not keep on adding products. All they do is bundle things together to save on cost—it is easier to manage. Under the same light, it is better as a dropshipper to sell a few products and only expand once you grow.
“But I do not have inventory, so it is not the same with fast-food logic,” you say. It has similarities, though, and below are the pitfalls of too many products:
In addition to all these, just imagine having hundreds of products, and you will realize that you will deal with hundreds of suppliers. Can you even keep track of each product’s quality and each supplier’s reliability? Customers expect a focused and quality selection of products, which is why selling too many things can be detrimental.
Dropshipping is a business, and it does require business math skills. If you think you add a mark-up of $5 for a product that costs $2 and believe you will be profitable, think again.
As a dropshipper, you must make projections and understand the principles of business math. Here are some examples:
You have to do the math of your online business so you can create sales targets and understand if you really are profitable or not. Most dropshippers do not even consider this, thinking that Shopify only costs $25 monthly anyway. Then, if orders pour in, they do not even have the cash to front these orders.
Worst-case scenario, it is not uncommon for payment processors like PayPal to put a hold on your money. If this happens to you, you are in deep waters.
A badly designed website is a sure turn-off and red flag. Take a look at this:
There is too much white on the screen, and the round images are already antiquated. It is a design that no longer fits our time.
Here is another one:
The logo is too big and the hamburger menu on the left is out of place. It would have been better if the dropshipper used a standard text menu to cover the open white space in the top middle. In addition, logos must be small, not this big.
Here are some design elements that you must consider:
To produce a good website design, I suggest that you Google your keyword and check the websites of the ones that are at the top of the search results. Most of these are huge companies backed by a lot of money—as such, they have professionally designed websites you can emulate.
Dropshippers often overlook the importance of finding a reliable supplier. Since inventory is costless, dropshippers typically do not even bother to buy what they sell. My advice is that you should at least get a sample and spend some capital now rather than regret it later.
Here are some common supplier issues:
Bad suppliers will ruin your dropshipping business. It is you who now have to deal with this problem. Your customer is unhappy, you do not get recommended to his friends, and worst, you may even get a really bad survey rating, and you can forget about customer loyalty.
For online businesses, especially in eCommerce, establishing strong supplier relationships is crucial for ensuring customer satisfaction and securing the success of the business.
The default mindset of a dropshipper is to offer as many discounts as possible, believing that the site visitor would be enticed by one and make a purchase. Often, this marketing approach backfires because it is too overwhelming.
Besides, if I were the customer, I would certainly think that if you could offer these discounts, your products are not as expensive as you claim them to be.
It is always better to run one promotion at a time, and then capitalize on the concept of fear of missing out or FOMO.
Promotional marketing is not bad. However, you need to do it the right way. Use it sparingly and ensure that you are giving your customers a reason to buy it now or they will be sorry if they didn’t.
Marketing is not as simple as putting out a promotion or discount. It is not as simple as slapping together some pictures and ad copy and launching a campaign on Facebook. You must have a business strategy for your online store.
A strategy is your game plan. It accounts for how well you understand the problem and how you intend to solve it.
To begin, you must:
Before you even launch an ad campaign, you need to create a plan for these three bullet points. Otherwise, you will be wasting your money and making Mark Zuckerberg richer.
The key here is to learn copywriting. There is a ton of information about this on YouTube, and there are many books you can read on how to be an effective salesperson online.
Copywriting may sound like a buzzword, and it may sound scary. However, it is nothing more than the art of persuasion. You need to write with the intent of convincing the reader to take action. Additionally, leveraging social media platforms is crucial in a marketing strategy to effectively reach prospective customers and enhance your online presence.
The manual way is the expensive way. If you think saving $25 monthly is an excellent achievement, think again.
Dropshippers do not want to spend, and it is understandable. But then, there are good business expenses and then there are the bad ones. Doing things manually eats up a chunk of your time. As a result, you will find yourself not having the time to market your products.
It is better to spend than to do things the manual way. For example, it is better to use Tradelle to find winning products and spend $29.99 a month than to spend weeks doing the same thing manually. If you think about it, $39 is only equivalent to five cups of Starbucks, which I am sure you can sacrifice for your business, right?
With tools like Tradelle, you can automate so many things, and you can also reduce your research time to a matter of mere minutes instead of hours or days.
Dropshippers usually give it a go for three months. No sales. Then they give up. Did you know that it took Amazon nine years to become profitable?
Dropshiping is the same—it is a business. The great news is that you do not have to spend millions of dollars on dropshipping. All you need is patience and the right marketing tactic.
If you do not have the budget to run ads, market your products by blogging. You have all the time in the world to write blog posts. If you do not have the time, hire a ghostwriter. If you do not have the budget for a ghostwriter, use AI like ChatGPT to write the articles for you.
The point is, do not give up so easily. Dropshipping is a war of attrition—only those who remain will come out victorious.
What was once fashionable is no longer desirable. What was once an excellent strategy may no longer work today. The audience on Facebook may have now moved to TikTok—so many things are happening in the world, and they are happening so fast.
Always be at the forefront of these changes. Know them early and adjust your business accordingly. Keep yourself in the loop in the dropshipping world by:
What you have learned from an online course provides you with an excellent foundation, but it is not enough. The market has its ebb and flow, and the tune changes time after time. The best approach to staying relevant is to keep up with the trends.
I am not saying that you should do every trend—choose what applies to your business. Always assess if the changes, if applied, will be beneficial to your business.
Dropshipping is a real business, and you will face many of the challenges that a traditional retailer does. Be prepared to take the bull by the horns, and do not ignore problems. What does it mean that dropshippers do not treat it like a business?
Here are some examples:
If you have ever worked in an office or any physical workplace, you know that each employee has a role to fill. The analyst has to analyze, the manager has to manage, and the maintenance guy has to clean and fix stuff.
As a dropshipper, you will wear all these hats. You are a solopreneur, and you will function in so many ways that it can be overwhelming. But then, that is how an ecommerce business works and that is how a business thrives. Running an e-commerce business comes with its unique set of challenges and responsibilities.
Undercutting your price is a mistake because this approach does not apply to your situation as a dropshipper. It may only apply if you are dropshipping on Amazon or eBay.
In Amazon, your product thumbnail sits right beside a competitor. Yours is priced at $49.99, and your competitor is at $39.99. The customer will not click your thumbnail.
You are likely dropshipping in your own Shopify or WooCommerce store. As such, there is no reason to undercut your price. It is all a matter of using an excellent copy.
You may say, “What if the customer types the same keyword on Amazon?” Well, the likelihood of this customer seeing the same product as yours is small. Treat your store as a special one, and your customers will see it that way, too.
While thorough research is importent, you can waste hours looking for winning products, and then end up not moving your store forward. While analysis is an important component of success, overthinking can also be counterproductive.
There is a term in business called analysis paralysis. It happens when you think too much that you fail to take action. Stop overthinking and just do it.
To help you, use tools that can give you the insight that you need, such as Tradelle. Earlier, you saw what level of information the tool can provide. Once you have that insight, it is easy to decide, without wasting countless of hours on market research.
The next step is to buy that item from the supplier to see how fast they pack and ship the goods and also verify the quality of what they sell. Execution and action are always better than no motion.
Whenever you look for products, the assumption is that they already have reviews. Use this information to make wise business decisions.
If your supplier is in AliExpress, then you are in luck because there are a lot of customer reviews to read. If the supplier is not on Ali, you can always visit the store’s other dropshippers and read reviews.
One caveat is that reviews can be fakes, so exercise caution. If the positive reviews have no text, or if the texts are so simple like “Great,” “excellent,” “fantastic,” etc., then you have justifiable reasons to believe that these reviews are fake.
Sometimes, it makes better sense to read negative reviews. Take a look at this:
The rating for this product is 4.7 stars out of five. However, if we check the negative reviews, this is what we get:
As you can see, there are many issues here. The supplier is sending the wrong product, the shipment is also a problem, and the product image is misleading. Do you want to work with a supplier like this? I don’t think so. Additionally, managing shipping costs effectively is crucial for customer satisfaction, as unexpected or high shipping costs can lead to negative reviews and impact your business reputation.
Dropshipping is not a get-rich scheme. It is not the business for you if you want to get quick returns. Dropshipping is hard, it’s a business model that requires a lot of skills.
Here are some hard facts about dropshipping:
Too many times, people think dropshipping is merely out-clicking buttons, and uploading product images, and then they are done. There is more to it than that. If you have no clue how marketing works, you will fail. If you have no idea how to choose a winning product, you will fail.
Dropshipping is like any other retail business—you need many people who possess different skills to make it succeed. The big difference? In dropshipping, you can work alone.
Lastly, many dropshippers do not seem to bother about really knowing who their customer base is. If you say, “My customers are men,” then you just made a fundamental mistake.
A target market is not a target audience. The market is men. The audience is something more specific.
Here is an example of an audience:
Can you see the difference? If you have this audience description, it will be much easier to write an ad copy because you are targeting a specific type of person, the ideal customer. Understanding your target audience is a cornerstone in building a successful online store, as it directly influences your marketing strategies and product offerings.
To start the right way and to be on the right track in dropshipping, I have a simple list here that I recommend.
These are:
Let us go through each one.
A course? Spend money? Well, you do not have to spend money. There are many free online courses you can take about dropshipping, and it is better to take them than to learn each aspect as you go along. YouTube is the best place to start.
A dropshipping course, free or not, is carefully designed by the course project. It entails everything you need to know step by step. As such, you get to know the nuances—all of them—of dropshipping.
Some dropshippers build a store because they saw a video of how to create a store and import products. This video, however, does not cover:
If you do not take a course, you will sort of wing the entire process, get overwhelmed, and then give up for failing. A course is streamlined, and it prepares you mentally and emotionally to face the challenges ahead.
Do not start dropshipping without a plan. This plan does not have to be so complicated. A simple task list will do. Use this task list to check where you are at in your business progress.
Here is a sample:
This is a plan for a WooCommerce store. You can use a similar template and add more details according to what you will need.
That is why you need to take a course. As you go along that online course, list down the things you have to do step by step and execute them.
YouTube has a ton of videos that will help you solve your problems as you go along your dropshipping journey. For example, if you see a website feature that you want to implement in your store, you can always look for that solution on YouTube.
Here are some types of videos you should be watching consistently:
Dropshipping, being a legitimate business, requires a never-ending learning phase. As people change, so do expectations and standards. you need to keep up with these changes if you want to win this game in the long term.
Finally, you need to learn business math, and how these formulas work. All these will make sense as you go along, and you will realize how these concepts and principles matter to your business.
Here is an example:
You may think that this is great because the global average conversion rate is only 3%, but if you do the math further, you will understand how this is bad. Out of 10,000 impressions, 100 people clicked (1% click-through rate).
Out of 100 people who clicked, 15 people made a purchase. For each transaction, your profit is $10. Overall, your gross profit is $150.
You spent $100 on the Facebook ad, so your net profit now is $50. It may sound great, but then you have a thing called customer acquisition cost (CAC). In this example, you spent $100 and acquired 15 customers. Your CAC is $100 / 15 = $6.67 per customer.
If your profit is $10, and your CAC is $6.67, you are already spending 66.67% of that profit on acquiring customers, and that is expensive. Learn your business math, and it will save you from financial losses and bankruptcy.
Where do you go from here? If you have not started yet, keep this list in mind and verify if you are making these mistakes once you start building your dropshipping store. The other thing I recommend is to check out Tradelle. Sign up for a free account and see for yourself how it can dramatically change your dropshipping business!
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